The knee-jerk response in the past has always been the current version of Windows. This is also the thinking that surrounded Windows Mobile. The real competition for tablets is going to be IOS and Chrome. If Microsoft is smart they are stripping down rather than bulking up for a tablet OS. What's their answer? Good question.
Larry M.

@ Frank.
Exactly. People dont bother to use office in the small form factor. I am currently using HD2(wm6.5) and previously Omnia(wm6.1). Altogether I might have opened Office mobile 5-10 times in 2 years for reading some docs. I can easily manage with QuickOffice or other free doc format reader software in Android.

You write:
"2) I like being able to scribble notes and draw using a stylus--strike two. No stylus, no handwriting recognition."
Agreed - I also like to be able to do that. I am running WinMobile6.5, and I didn't much like the PhatWare's version of handwriting recognition. May I ask you what do you use for handwriting recognition on your MS phone? And what drawing tool?
Thanks,
Pavel

The comment from the analyst says a lot: "Tight Office integration is going to be a differentiator that Microsoft will have and can continue to develop upon." Oh really? Because so many business people are just aching to open Office documents on a 4.3 inch screen?
MS might have more success focusing its mobile efforts gaming and app development -- the fun stuff.

Steve Balmer was seen really happy to announce the new phones based on win7. But there is no excitment from either the fans of microsoft or from any smart phone buyers regarding the win7 based phones. It would be good if microsoft come out with an innovation to kill iphone and ipad. The only incredible thing that I heard from MS was about surface computer which happened many years before.

Qualcomm told me this morning that the first Win7 phones are based on Qualcomm QSD8250 or QSD8650 SoCs which include a gigahertz-class apps processor and separate modem block--and I added that to the story above.

The lack of Tegra support is certainly not going to help them on the coming wave of tablets. The iPads have already severely impacted laptop sales and I think that high-end smartphones are going to be next. Microsoft may have gotten to the party just as it is beginning to break up.